Kathleen Miller and her husband US Senate republican candidate Joe Miller cut the ceremonial first piece of cake with the help of Miller assistant Adele Morgan at the Snow Goose restaurant before walking over to the Egan Center Election Central in downtown Anchorage on Tuesday August 24, 2010.

US Senate republican candidate Joe Miller signs a campaign sign for supporter 10 year old Dillon Chilstrom as his younger 4 year old Evan Chilstrom looks on at the Snow Goose restaurant in downtown Anchorage on Tuesday August 24, 2010.

Kathleen Miller and her husband US Senate republican candidate Joe Miller cut the ceremonial first piece of cake with the help of Miller assistant Adele Morgan at the Snow Goose restaurant before walking over to the Egan Center Election Central in downtown Anchorage on Tuesday August 24, 2010.

Bernadette Wilson, campaign manager for Yes on 2, attaches balloons to their signs to help separate them from candidate signs along the Seward Highway in Anchorage on election day, Tuesday, Aug. 24, 2010.

Rose Abraham-Nelson, left, walks daughter Laurel Nelson, 12, through the voting process as she casts her ballot Tuesday August 24, 2010 at East Anchorage United Methodist Church. Laurel is a home schooled seventh grader.

Supporters for gubernatorial candidate Hollis French wave campaign signs from the top of a dog truck parked in the Sears parking lot along the Seward Highway in Anchorage on election day, Tuesday, Aug. 24, 2010.

Joe Miller's lead over U.S. Sen. Lisa Murkowski slightly narrowed to 1,668 votes with all the election precincts counted Wednesday. A stunned Murkowski said she is not giving up hope until absentee ballots are counted starting next week.

"It ain't over yet, folks," Murkowski said at her campaign headquarters in Anchorage. "There are thousands of absentees that are yet to come in."

Miller was leading with 47,027 votes to 45,359 for Murkowski after the final precinct results came in late Wednesday afternoon. More than 16,000 absentees were requested from the Division of Elections and about 7,600 of them have come back so far.

Murkowski wouldn't discuss whether she'd pursue a third-party candidacy or independent write-in candidacy to keep the seat if she loses the Republican primary. "It is way, way, way too premature to even be talking about that," she said.

If Murkowski loses the primary, there is a possibility that she might able to run on the Libertarian ticket in the November general election. But that would require the Libertarian Senate candidate, David Haase, to agree to step aside, and for the Alaska Libertarian Party to agree to put Murkowski on the ballot.

Alaska Libertarian Party chairman Scott Kohlaas said he was open to the idea and that party leaders were discussing it. "There's a chance," Kohlhaas said on Wednesday.

Haase didn't rule out the idea, saying he'd certainly listen if Murkowski wanted to step into his place.

The Miller campaign headquarters in Anchorage was quiet Wednesday, with a handful of staffers poring through the precinct-by-precinct results.

Miller was driving the seven hours on the Parks Highway from Anchorage to his hometown of Fairbanks on Wednesday and not doing interviews, despite a flood of requests coming in from Alaska and national media. Miller's spokesman, Randy DeSoto, said he's not surprised the lead narrowed by about 500 votes throughout the day as hand-counted ballots from rural Alaska were tallied.

Both campaigns expected Murkowski to be stronger in those areas, given her name recognition and how rural areas of the state particularly rely on federal spending. DeSoto said he doesn't see any reason to expect the absentee votes will allow Murkowski to continue to chip away at Miller's lead. But Murkowski campaign manager John Bitney said many people voted absentee before the final ad blitz launched by the Tea Party Express the weekend before Tuesday's election.

None of the absentees has been counted. Absentee ballots had to be postmarked by Tuesday but could arrive up to 10 days after the election if mailed in the United States and 15 days if overseas. The Division of Elections will do its first count Aug. 31, with additional counts scheduled for Sept. 3 and Sept. 8.

The voting trend would have to be much different among absentee voters than the rest of Alaska voters in order to put Murkowski over the top. The winner of the Murkowski-Miller race will face Democrat Scott McAdams in November.

McAdams said he expects to face Miller, and that a Murkowski comeback looks unlikely.

"It's possible but it's not probable," he said.

"CLEARLY THERE WAS A SHIFT"

Murkowski seemed relatively upbeat Wednesday, given the circumstances. She hugged members of her campaign staff and briefly spoke to reporters before leaving for the airport to put her son on a plane for college in Colorado.

Murkowski said she was still digesting the election results and doesn't know what happened.

"Our (poll) numbers all throughout have not only been strong but really overwhelmingly strong," Murkowski said. "And clearly there was a shift, whether it was kind of the anti-incumbency feedback that you get in the Lower 48, I don't know yet. I haven't spent that much time dwelling on it because it's been just a relatively few hours since the polls closed and we started seeing the results ... I'm sure there will be much that is written on who is to blame and who is to credit."

Murkowski's options are limited if she loses the Republican primary but still wants to run in the November general election. It's too late for Murkowski to file with the state to have her name appear on the ballot as an independent. So she would have to launch a write-in campaign if she wants to be an independent

Libertarian Haase is the only third party candidate in the race, so that would be the only option for Murkowski to join a new party for a run. Haase would surely press Murkowski on the Federal Reserve, which is his focus. "Let's take the Federal Reserve, nationalize it and take that income earning capacity and turn it over to the people to finance Social Security and Medicare," Haase said.

DEMOCRATS TARGET MILLER

The Democratic nominee for U.S. Senate, McAdams, is the mayor of Sitka but isn't well-known elsewhere in Alaska. But he pointed out that Miller, who has not held elected office, was a political unknown before he filed for the U.S. Senate this spring and picked up the support of Sarah Palin and the Tea Party Express.

Palin said on the Fox Business Network on Wednesday that she was "over the moon" at Miller's success. "We are very pleased with this awakening in Alaska and across America," she said.

McAdams called the tea party-backed Miller too extreme for Alaska, in what is sure to be a theme for the Democrats if Miller turns out to be the Republican nominee.

"I invite people who supported Senator Murkowski to please take a look at our campaign. I believe we are the moderate, rational, practical campaign, not the campaign of extreme measures and 19th-century ideology," McAdams said.

McAdams said Alaskans value federal appropriations to develop infrastructure and don't buy proposals such as abolishing the federal Department of Education. Miller has said education is a function to be left to states and localities. He's argued that if the nation does not slash spending, it is headed for a "sovereign debt crisis" that would be worse for Alaska than less federal money.

Alaska Democratic Party chairwoman Patti Higgins said she knows some Democratic supporters who voted for Miller because they thought he'd be easier to beat than Murkowski.

"People called me up and very proudly told me they did that, but, you know we're all better off if you just go vote for who you want instead of playing games. It's just a handful of people who actually go do that," she said.